Why leasing is important for Kenyan government

Leasing vehicles and equipments comes with a lot of advantages for the government. [Photo: Courtesy]

According to consumer reports, leasing vehicles brings with it a lot of advantages for the government in terms of expenditure.

After the state has acquired these vehicles, it enjoys less hassle moments as;

Vehicles provided are at trouble-free years.

The vehicles are always of the latest model and are covered by the manufacturer’s warranty including free oil changes as well as regular maintenance.

It is very affordable to acquire well equipped and expensive vehicles.

Too, the government is able to dispose them off without any difficulty of trading in or selling to another customer as well as worrying about the price fluctuations.

Treasury Principal Secretary, Kamau Thugge said in October that, leasing vehicles by the government is more cost effective as compared to buying.

“We now know that the pilot leasing project is cost-effective and more efficient. It is a concept that can now be spread to the rest of the ministries,” said Treasury Principal Secretary Kamau Thugge during the signing of the lease agreement with Vehicle And Equipment Leasing Ltd.

He said the state targeted to save up to Sh1 billion annually.

The government has awarded Co-operative Bank of Kenya’s leasing arm, Co-op Bank Fleet Africa Leasing Ltd a tender to supply 125 police vehicles worth Sh890 million.

The deal whose negotiation was conducted in October 2018, is aimed at providing nearly 420 trucks to Kenya Police worth Sh2.2 billion, to help in logistics.

Co-op bank said, “This maiden transaction, which is part of a larger Sh2.2 billion deal, entails the financing and delivery of a fleet of 125 vehicles to the Ministry of Interior, the National Police Service and the Prisons Department.”

In October 2018, the government renewed a leasing deal with Vehicle And Equipment Leasing Ltd (Vaell) to supply cars to the police.

This pact saw 3,000 police vehicles given to the National Police Service (NPS). The firm had provided 1,200 vehicles to NPS for four years.

Generally, leasing of equipment cuts a company’s or governments’ spending, diverting the saved money to the development of sustainable projects.